The Government has issued new regulations transposing the EU’s 4th Anti-Money Laundering Directive into UK law. The new regulations are now in effect.
The intention under Money Laundering Regulations 2017 (“MLR 2017”) is to improve upon and plug certain gaps in MLR 2007, including:
- changing the approach to customer due diligence
- seeking to prevent new means of terrorist financing, including through e-money and prepaid cards
- improving transparency of beneficial ownership of companies and trusts
- effectively enforcing sanctions.
Who is covered by MLR 2017?
The “relevant persons” remain the same as under the existing rules but there will be some changes for Trustees relating to transparency of beneficiaries in their trusts.
New rules come in requiring estate agents to carry out more rigorous checks to ensure that payments are coming from a legitimate source.
There is also an increase to the current turnover threshold from £64,000 to £100,000 for those engaging in financial activity on a very occasional basis.
What are the new requirements?
The new regulations build on the current AML framework, but there are some changes, potentially significant, that you need to be aware of. For example one of the main changes relates to how relevant persons carry out a more risk-based approach towards anti-money laundering especially in how they conduct due diligence. Procedures required under the new regulations are driven by risk assessment to a greater extent than was previously the case. It is therefore of even greater importance to have an up to date risk assessment for each individual client.
The risk assessments should include factors relating to:
- countries or geographic areas operated in;
- products or services;
- transactions; and
- delivery channels.
Determining the appropriate level of due diligence will require analysis of risk factors based on the EU Directive and which are set out in MLR 2017. Sector-specific guidance will also follow.
Effective dates for changes
Changes are effective from 26 June 2017.
How can we help?
We run practical courses which help businesses understand the regulations and apply the learning back in the workplace. This is especially relevant in the case of all matters of a compliance nature. We will be running an Anti-Money Laundering and Counter-Terrorist Financing course on 3 October and 13 November which will give further details on the new regulations and the implications for organisations. The courses will be presented by our compliance expert, Steve Giles.